I am the former Co-CEO of KP Media, a leading Publisher in Ukraine. In addition to being the leading news organization in Ukraine (Korrespondent, Kyiv Post), we also owned the largest online business, Bigmir.net. I'm now back in the US, consulting and speaking in the areas of Digital Marketing and Digital innovation. You can find my website at www.DigitalTonto.com and follow me on Twitter @DigitalTonto.

Why The Apple - Samsung Rivalry Isn't As Important As You'd Think

When Samsung announced their new Galaxy s4 last month, many tech pundits rushed to declare that the Korean giant had finally bested the iPhone. Others disagreed and still consider the iPhone king.

Most people, however, really don’t care. After all, you can get a great smartphone from a variety of manufacturers and any significant difference will be wiped away in six months or so. The smartphone race has become less about technology and more about taste and preference.

Technology tends to go in cycles. Personal computing and the struggle to acquire adaquate processing power marked the ‘80’s. In the ‘90’s, computers became essential for office productivity. Apple ruled the 00’s by providing consumers with design and usability.

When we look back on this decade, will will most likely remember it as the era of artificial intelligence.

What is Artificial Intelligence?

Artificial Intelligence (AI) is a term that gets thrown around quite a bit and many people have different ideas about what it means. I think a fairly standard definition, however, would be the ability to pass a Turing test – to exhibit behavior that is indistinguishable from a human in a natural conversation.

That would include two basic functions: pattern recognition (especially voice recognition) and the ability to adapt decision making to changing contexts. As I noted in an earlier post, it would also necessarily involve the capacity to learn. So an intelligent agent would be able to understand us, make judgements about incoming data and get to know us better over time.

So it’s becoming clear that the device wars of the future will be less determined by the quality of the screen or the camera (both of which are already very good) or even the processor (most heavy tasks will be done in the cloud anyway), but in the ability to become a true personal assistant: one that can adapt to our tastes and needs and make good judgments.

And that’s what makes the Apple – Samsung rivalry less and less interesting. Neither has a strong AI effort, so while they might both still be dominant in devices five years from now, it’s hard to see how either will control the interface.

Who Will Rule?

One constant of previous tech cycles is that when technology changes, so do the companies that lead it. Apple and Compaq ruled the ‘80’s, Microsoft and Intel became monopolies in the ‘90’s and Apple rose again to prominence in the 00’s.

It’s still too early to tell who will rule this decade, but these are the major players.

But what has everybody talking these days is the Watson Computer that prevailed against even the most talented humans in the game show Jeopardy!, which requires a unique blend of intuition and intelligence. It is now being deployed for medicine, finance and a variety of other applications.

Watson required $3 million in hardware to build, which will probably shrink to about $30,000 in ten years, putting it in reach of just about any business, or even a reasonably well-heeled entrepreneur, who wants to make artificial intelligence applications available to ordinary consumers in the cloud.

Google (R&D 6.7 Billion): For such a young company, Google has already built an impressive R&D effort, much of it focused on mobile and AI applications, such as Project Glass and autonomous cars. It’s vaunted Google X lab is so secret that no one even knows where it is.

Artificial intelligence is already an important part of their core search and mapping businesses and they are working quickly to expand those capabilities with Google Now. As Fred Wilson of Union Square Ventures described in a recent post, Google seems to be pulling ahead to an early lead in the race to integrate AI into our daily lives in a meaningful way.

Microsoft(R&D 9.8 Billion): The dark horse in the race is Microsoft, which ruled the 90’s but is coming off of a decade of decline in influence and prestige Lately, however, they have been showing signs of a resurgence with a small but growing global mobile share and Windows 8, which provides the only unified platform for the desk, handset and living room.

Most of their R&D budget, however, is reportedly devoted to cloud services, so from a mobile perspective we can expect Windows phones to eventually become enabled with some combination of Azure (which already powers some Android apps) and Kinect, which is already an impressive voice and gesture recognition platform.

While other competitors will surely emerge (Nuance, for example, is a strong candidate), these three appear to be at the forefront of bringing AI into the consumer experience.

What’s interesting is how absent Apple and Samsung appear to be. Apple’s relatively paltry $3.4 billion R&D budget will do little to bolster their current offering and Samsung, which reportedly has a massive $41 billion R&D budget, is mostly focused on chips and screen technology.

The Return of Big Tech

The PC revolution was not hatched in a corporate boardroom or even with much planning or forethought. It largely grew out of places like the Homebrew Computer Club, a group of young hobbyists (among them Steve Jobs and Steve Wozniak, the founders of Apple), who liked to tinker with homemade computer kits.

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Whose devices? Apple products are pretty sticky and users are very happy with them. I’d say most people think the Apple stuff works the best and have had features for years that others are now advertising as if they are ‘new’. LOL.

You say this rivalry isn’t important, and then go on to suggest it’s because hardware isn’t important, that it’s all about the cloud.

And yet, Apple includes great cloud services on all their devices, while Samsung relies on others to provide it. Who has the better position then, according to the point you eventually came around to?

I have been reading a lot about developer problems with iCloud. Specifically there seems to be some serious architectural issues with something called core data services that basically does not work. Other simpler services do work but not that. This needs to be fixed and they need to do it soon.

Siri is a nice little program that is over hyped. It is useful and does what they say it does and no more. The problem is the ads imply it does more which it does not.

Maps was a disaster and they need to fix it.

These are some examples of cloud services that Apple needs to fix and then extend. I believe these are properties of the Apple experience that are causing some to doubt the company whether they know it or not.

iOS is an operating system and not sold as a separate product, so the numbers would be units. I included the link above (albeit under Microsoft’s share), but I’ll provide it here so that you can look for yourself:

That doesnt answer the question of Mozart, cheap excuse is to just go all the way to losing share and so on, cmon this is supposed to be forbes, not to support apple for sure, but to get that answer of losing share? that doesnt answer quality issues like apple having its own solution like (icloud) and samsung using others.

i concur. i find many of these articles unsatisfying when i put on my economist hat. it lacks understanding of context, proportionality and orders of magnitude. yes android has grabbed tons of share. a lot of it by dumping product onto market for free. thus you see apple garnering 3/4 of every smartphone dollar customers actually spend.

having worked at microsoft for over a decade and with it many overpromised benefits of r&d there, their hefty research budgets have yielded very little smarts in the software. better frameworks to create software for the developer, or more efficient algorithms. but the applied piece is definitely missing if not broken.

i think it is not rigorous nor sufficient to use r&d spend as proxy for where the hockey puck is going. talk about concrete products and outcomes. siri sucks, one may say, but who else is better? msr has demoed some cool stuff but how real is it at scale? why hasn’t dragon or ibm’s longstanding efforts bore fruit yet?

the human need for certitude in forecasting at the macroeconomic (which is my field of interest, no less) overdiscount the microeconomic creative and engineering decisions that make technology accessible and democratized for the masses. in other words, while billg thought of tablets for a decade before jobs, he lacked the creative framework to think outside preconceived boxes of his time and was stuck on stylus driven interactions.

I have a lot of respect for IBM. Historically they have hired some really smart people and allow them to do a lot of interesting applied and basic research some of which you mentioned.

Microsoft does a lot of things too. Over a decade ago they opened up a voice research center in China following IBM. Why is it that others pioneered the use of voice in computer interfaces? A year ago someone showed me a video of the Microsoft home as a way to show me all the cool things Microsoft was doing. I pointed out some problems with the video to prove to him how it was a not so clever demo. I am not as enamored of Microsoft’s technology as you are. I think Azure is great. It is one of the only two platforms companies can use to build a cloud service. I am not so sure their breadth is as useful as you indicate.

I followed your link about the Google Now thing. I do not see AI there. What I see is a clever use of standard tools to provide services that are useful. What you need is an intelligent use of a database and a program that can make use of that data to reach out to you to say Hey! you have something on your calendar you need to pay attention to. Essentially every calendar function today does this without anyone saying this is a feature of AI.

As far as I know Apple does not do basic research. But they have historically hired driven and smart people from various disciplines to help drive their products. This is something other technologies do not do. What they need to do is improve and extend iCloud, passport, Siri, iTunes, etc. This will keep its users loyal and attract new ones. AI or not.

I look forward to your other articles even if I think you are overstating your case about AI.

You make a lot of great points. Apple has historically been able to thrive by improving other’s technology, although it remains to be seen if they can pull it off without Steve Jobs.

Microsoft has indeed missed many of the great shifts over the last decade, especially mobile. Still, they have managed to remain a very strong business that throws off $20 billion a year and have staked out a significant ecosystem around the Web of Things and Xbox live (over 60 million subscribers).

I think pasrt of the perception is that Microsoft is historically an enterprise company, so some of their products, like Ford SYNC, come out with other brand names and others, like their servers and tools businesses, are little known outside CIO circles.

I disagree about Google now and AI. Integrating voice recognition, mapping, etc. is definitely an AI function. Although there’s still a long way to go till a truly intelligent agent (about 15 years), it’s a good start.

Yes. There is a big question about how Apple operates in the post Jobs world. The jury is still out.

Microsoft is a strong company. They arguably own the enterprise. While they are the number one gaming console company, it doesn’t make them a lot of money. It recently has started to be consistently cash positive, but the margins are terrible.

Computer software in cars are terrible. In part because car manufacturers with few exceptions are not computer companies. I keep reading about the incrmental progress Apple is making in getting their products into cars. One of the big opportunities is extending Siri into cars. This is one of the opportunites I list above in enhancing and extending their software.

I guess we will have to disagree about Google Now. I don’t see any AI in it, but then I haven’t seen their code either.

All these articles on the so called problems of Apple, the unstopability of Samsung, and how Apple has lost the next big thing, cannot cope without Steve Jobs, sells less than last year, loses share in units (cheap ones, not dollars) are interesting from a psychological point of view. Part, I think, is the joy of beating up a phenomenally succesful player (a sad but very human attribute), another is the Windows crowd desperate to get payback after years of trailing behind Apple, massive R&D or not. Then, of course, the Wall Street crowd looking to spike volatility,making money on Apple shares whether up or down. All spurious rubbish. Apple can be faulted for managing PR badly, ie not at all, and being a whipping boy for every twit with a stick. Time will tell.

I don’t think so. I’m a huge Apple fan, love their products and am heavily invested in their ecosystem. However, they continue to miss earnings estimates, their sales growth is slowing as are their product launches.

Greg, thanks. I do not see their sales growth slowing, did not do so last quarter (like for like weeks) I do see segments shifting, think iPod implementation into iPad and iPhone. Samsung sells a great deal at substantially cheaper prices, when Apple offers their magic at several price points, as they have with iPod, they will sell bucketloads in the US and abroad. Their iCloud service looks good, so does AppleTV, etc In terms of R&D,what has Micrsoft achieved with it? Xbox, and what else? A very uneven Windows8, yes maybe they have great things to come, haven´t seen them yet. As for Samsung, copy Apple sell for ceaper is their strategy, works well for them